COLOMBO: Sri Lankan rupee forwards edged up on Wednesday as dealers were reluctant to trade at levels lower than 147.00 due to moral suasion by the central bank, with the country's finance minister saying the currency would stabilise in June after money from an IMF loan flows in.
Dealers also said pressure on the local currency was likely to ease on expected fund inflows following the loan deal with the International Monetary Fund and on a plan to raise $1.5 billion through the sale of a 10-year sovereign bond.
Finance Minister Ravi Karunanayake on Tuesday told Reuters the rupee currency would consolidate in the 146.00 per dollar range with the IMF loan money expected in early June.
The dollar/rupee forwards, known as spot next, were at 146.80/95 per dollar at 0611 GMT compared with Tuesday's close of 146.90/147.00.
"There is demand but nobody wants to trade below 147.00 fearing repercussions," a currency dealer said, asking not to be named.
One of the two state-run banks, through which the central bank usually directs the market, sold dollars at 146.75 to select banks on Tuesday, and dealers took the cue to refuse trades below the 147.00 level.
Officials at the central bank were not immediately available for comment.
The spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following the conventional spot settlement, meaning it is six days ahead for Wednesday's trade.
Trading in the spot currency however has been intermittent since Jan. 27, and it was barely bid on Wednesday as well. The spot rupee reference rate was pegged at 145.75, the dealers said.
Sri Lanka's central bank fixed the spot trading rate at 143.90 per dollar until May 2, they said.
Foreign investors bought more government bonds last week, which also helped the currency, dealers said.
Government securities held by foreign investors rose by 11.1 billion rupees ($76.29 million) to 232.7 billion rupees in the week ended May 11, latest central bank data showed.
Meanwhile, Sri Lanka's stock market was 0.11 percent higher at 6,678.39 as of 0653 GMT on a turnover of 1.15 billion rupees ($7.86 million).
Comments
Comments are closed for this article.